Correlation Between Willis Lease and Triton International

Can any of the company-specific risk be diversified away by investing in both Willis Lease and Triton International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Willis Lease and Triton International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Willis Lease Finance and Triton International Limited, you can compare the effects of market volatilities on Willis Lease and Triton International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Willis Lease with a short position of Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Lease and Triton International.

Diversification Opportunities for Willis Lease and Triton International

0.95

Correlation Coefficient

Willis Lease  Triton International

Almost no diversification

The 3 months correlation between Willis and Triton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Willis Lease Finance and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International and Willis Lease is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Willis Lease Finance are associated (or correlated) with Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of Willis Lease i.e., Willis Lease and Triton International go up and down completely randomly.

Pair Corralation between Willis Lease and Triton International

Given the investment horizon of 90 days Willis Lease Finance is expected to generate 4.51 times more return on investment than Triton International. However, Willis Lease is 4.51 times more volatile than Triton International Limited. It trades about 0.38 of its potential returns per unit of risk. Triton International Limited is currently generating about 0.21 per unit of risk. If you would invest  7,106  in Willis Lease Finance on July 13, 2024 and sell it today you would earn a total of  10,379  from holding Willis Lease Finance or generate 146.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Willis Lease Finance  vs.  Triton International Limited

Willis Lease Finance

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Willis Lease exhibited solid returns over the last few months and may actually be approaching a breakup point.

Triton International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Triton International may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Willis Lease and Triton International

The main advantage of trading using opposite Willis Lease and Triton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Lease position performs unexpectedly, Triton International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Triton International will offset losses from the drop in Triton International's long position.

The idea behind Willis Lease Finance and Triton International Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.